EU not seen matching U.S. threat of sanctions against Russia

* Diplomats do not expect move on sanctions; mediation to be
emphasized

By Justyna Pawlak and Luke Baker

BRUSSELS, March 3 The European Union is unlikely
to match the United States in threatening sanctions against
Russia when its foreign ministers meet to discuss Ukraine on
Monday, instead pushing for mediation between Moscow and Kiev,
officials say.

The emergency talks, convened after Russian President
Vladimir Putin secured parliamentary approval on Saturday to
invade Ukraine, are expected to result in a strongly worded
statement of condemnation, but no immediate punitive measures.

That will leave the EU a step behind the United States, with
U.S. Secretary of State John Kerry threatening visa bans, asset
freezes and trade restrictions against Russia on Sunday,
following the seizure of the Ukrainian peninsula of Crimea.

"American businesses may well want to start thinking twice
about whether they want to do business with a country that
behaves like this," Kerry said, describing Russia's actions as
something out of the 19th century.

For their part, European governments will take a more
cautious approach, diplomats said, with any prospect of
sanctions against Russia unlikely to be spelled out directly.

Instead, several EU member states will urge international
mediation between Russia and Ukraine, possibly through Europe's
democracy watchdog, the Organisation for Security and
Cooperation in Europe, or via the United Nations.

Germany, France, Britain, the Netherlands and Finland are
among those favouring mediation and efforts to calm the crisis,
diplomats indicated. German Chancellor Angela Merkel spoke to
Putin by phone on Sunday evening and proposed a "fact-finding"
mission to start a political dialogue. A German government
spokesman said Putin had accepted the idea.

Finland, which shares a border with Russia, said EU leaders
or the OSCE could play a role in "seeking solutions and carrying
them out, especially in protecting the rights of minorities".

The seizure of Crimea has created the greatest moment of
tension between Russia and the West since the collapse of the
Soviet Union in 1991, an event Putin has described as the worst
geopolitical catastrophe of the 20th century.

Speaking to Merkel by phone on Sunday, U.S. President Barack
Obama underscored the "complete illegitimacy" of Russia's action
in Crimea. A senior U.S. official said Obama would make the same
point to the leaders of Britain and Poland.

But many Europeans are concerned about pushing Putin too
far, mindful of their deep economic links with Russia, including
a heavy dependence on Moscow's gas and oil exports. There is
also concern about the time and legal hurdles sanctions require.

Moscow has said it is merely protecting the lives of
Russian-speaking nationals, and appears to be calculating that
the West cannot afford to risk a wider conflagration by taking
anything approaching military action.

CLOSE RELATIONS

Russia is the EU's most important trading partner after the
United States and China, with 123 billion euros ($170 billion)
of goods exported there in 2012. It is also the EU's most
important single supplier of energy products, accounting for
more than a quarter of all EU consumption of oil and gas.

Relations between Brussels and Moscow have deteriorated over
the last year, with EU governments expressing anger over
Moscow's pressure on former Soviet republics hoping to forge
closer economic ties with Europe, including Ukraine.

Tensions reached new heights when Moscow persuaded Ukrainian
President Viktor Yanukovich to reject a trade deal with the EU
in November, a decision that sparked three months of mass
protests that led directly to his overthrow.

One decision that could be agreed by EU foreign ministers is
asset freezes against Ukrainians accused of misappropriating
public funds, similar to measures taken by Austria, Switzerland
and Lichtenstein last week.

Austria announced on Saturday that it was blocking the bank
accounts of Yanukovich and 17 others, following a request by
Ukraine's new authorities. Ukraine's new leaders have accused
Yanukovich of embezzling as much as $37 billion in three years.

"One option we still have open is asset freezes against
Ukranians," said an EU diplomat. "To make sure money doesn't
disappear over time. This may be a track that can be explored by
all of us."
(Writing by Justyna Pawlak, editing by Luke Baker and Alistair
Lyon)

OSLO, Dec 9 Colombia's peace deal with Marxist
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Juan Manuel Santos said on the eve of collecting a Nobel Peace
Prize that he called a "gift from heaven".

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